Aug 31, 2022
THE GLOBAL RECESSION:
On a really, really overly-simplified scale, it’s easy to see how one failing economy could effect the demand of another, while increasing costs on another, and causing a cascade effect throughout the entire world.
In this case, higher energy costs result in higher inflation…higher interest rates…reduced demand…supply chain shocks…and, before you know it…we’re in a global recession.
To me, it’s not rocket science to see that China’s lack of growth would result in fewer US Exports, less international investment, and less profits for the businesses that we invest in – but, solving the issue isn’t going to happen anytime soon – and, most likely, it’s going to serve as a reminder that – each country will have to adapt for the option of producing their own materials “in house” to avoid future shortages.
Realistically, though…it seems like, the most plausible scenario is that “both the United States and the euro area experience near-zero growth next year, with negative knock-on effects for the rest of the world” – which, basically means, our economy will need to cool off, before pushing forward.
In a weird way, less demand is desperately needed, and could help bring down inflation to the point where interest rates won’t need to constantly increase. But, for the foreseeable future, it’s probably best to pay attention to how much you spend, keep a diligent budget, continue investing as usual…and, stay employed…because, most likely – we’ll have to wait for these conditions to improve before the entire world can continue grow…hopefully….in a way that benefits everyone.
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